Technical Analysis – UK 100 index pulls back from fresh highs; bullish bias holds

The UK 100 stock index (cash) has been trending upwards since February. However, the index experienced a minor downside correction lately after its rally peaked at the 20-month high of 7,400.

This recent pullback is unlikely to continue as the momentum indicators suggest that the bullish forces are still in play. The stochastic oscillator is sloping upwards near the 80-overbought area, while the RSI is hovering in the positive region.

Should the buying pressure intensify further, the immediate hurdle for the bulls might be found at the 7,331 level. If the price crosses above this barricade, then the next challenge could be the 20-month high of 7,400. Failing to halt there, the price ascent might stop at the 7,500 psychological mark or even higher at the February 2020 high of 7,560.

Alternatively, should the bears retake control, initial support might be met at the 7,188 and 7,026 levels, where the 50- and 200-day simple moving averages (SMAs) are found respectively. If the price dips beneath these levels, then the next obstacle for sellers could be found at the 6,945 region.  Breaching this support point, the price would then move towards the 6,824 barrier.

Overall, UK 100 has been in a long-term upward move. Although the index has given up some ground recently, only a clear move below 7,026 could turn the short-term picture back to negative.

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.